Indian authorities blocking equipment acquisitions from China

30 Apr 2010

The Indian government is reportedly blocking the acquisition of telecoms equipment from Chinese vendors citing matters of national security, according to the Financial Times reports. ‘Proposals for procurement of equipment from Chinese original equipment manufacturing vendors have not been recommended due to security concerns,’ the Indian Department of Telecommunications (DoT) reportedly said in a communication to the Prime Minister’s office this week, adding, ‘Therefore, the proposals from the service providers for purchase of Chinese equipment is turned down.’ The claim has been echoed by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, which has said that it has received complaints from a number of domestic vendors, prompting it to contact the relevant government agencies regarding the matter.

In December 2009 the DoT amended its licence conditions for mobile network operators, adding a clause that required them to submit all plans related to equipment procurement for foreign vendors so that orders could be screened for ‘security clearance’. While the regulatory change did not specifically mention China, it has been claimed that in practice security agencies have been blocking applications that involve vendors from the country. ZTE, one of China’s largest network hardware vendors, is believed to be continuing an investigation into the situation, although it noted: ‘This is apparently not normal commercial behaviour but something related to political factors, and it is not appropriate for us to comment on political issues.’